I have been watching for this every day and it is finally here. Tons of information and if you plan on doing anything with real estate this year, you will probably want to read it all. Excellent job done by Tom For Arizona Regional Multiple Listing Service.

This report is based on facts, the stuff that really happened reported by the people working the market. The numbers are actual.

***Our annual spoiler alert*** This report is lengthy by normal STAT standards, and as the name STAT infers, there are a lot of numbers. For those of you not into that sort of thing, here’s our annual tweet: “2017 was a very good year for housing and 2018 is projected to be even better.”

It’s that time of year again. The 2017 numbers are in the books and it’s time for our annual year in review. We’re going to start by taking a quick look back at our quarterly reports and then follow up the three quarterly excerpts with a look at six key metrics in 2017 To read the whole report and view the graphs click on the link below.

BUYER CAN’T “BLACKMAIL” SELLER WITH EARNEST MONEY

Buyer Can’t “Blackmail” Seller With Earnest Money

Question: On the day of the closing of the sale of our Peoria home, the buyer refused without any reason to sign the closing documents, even after we gave the buyer the required three-day cure period notice. We need to close the sale of our Peoria home in order to close escrow in two weeks on the purchase of a new home in Mesa.

When we told the seller of the Mesa home about our problem, the seller was very nice and agreed to give us a 60-day extension to close. Our real estate agent said that we should be able to sell our Peoria home during this 60-day extension period. The buyer of our Peoria home, however, is demanding the return of his $5,000 earnest money. He says that, if we don’t agree to refund his $5,000 earnest money, he will delay any sale of our Peoria home to a new buyer by filing a lis pendens. What is a lis pendens? Although we know that we are being blackmailed, should we agree to refund this $5,000 earnest money?

Answer: No. If the only reason that the buyer is not buying your Peoria home is “buyer’s remorse,” you should be able to cancel the purchase contract after the buyer failed to close on the scheduled closing date. The title company then should pay the $5,000 earnest money to you.

Note: A lis pendens means that there is a pending lawsuit regarding who is entitled to the ownership of the home. The buyer of your Peoria home could file a lawsuit, and record a lis pendens, only if the buyer had a claim for specific performance of the purchase contract to buy the home. The buyer does not, however, because the buyer no longer wants the home. Therefore, the recording of a lis pendens would be wrongful. Under A.R.S § 33-420(A), the buyer could then be liable to you for a $5,000 penalty, plus your attorney’s fees, for wrongfully recording this lis pendens.

How to Get the Most Money from the Sale of Your Home

Every homeowner wants to make sure they maximize their financial reward when selling their home. But how do you guarantee that you receive maximum value for your house? Here are two keys to ensure that you get the highest price possible.

1. Price it a LITTLE LOW

This may seem counterintuitive. However, let’s look at this concept for a moment. Many homeowners think that pricing their home a little OVER market value will leave them room for negotiation. In actuality, this just dramatically lessens the demand for your house (see chart below).

Instead of the seller trying to ‘win’ the negotiation with one buyer, they should price it so that demand for the home is maximized. By doing this, the seller will not be fighting with a buyer over the price, but will instead have multiple buyers fighting with each other over the house.

Realtor.com gives this advice:

“Aim to price your property at or just slightly below the going rate. Today’s buyers are highly informed, so if they sense they’re getting a deal, they’re likely to bid up a property that’s slightly underpriced, especially in areas with low inventory.”

2. Use a Real Estate Professional

This, too, may seem counterintuitive. The seller may think they would make more money if they didn’t have to pay a real estate commission. With this being said, studies have shown that homes typically sell for more money when handled by a real estate professional.

A new study by Collateral Analytics, reveals that FSBOs don’t actually save any money, and in some cases may be costing themselves more, by not listing with an agent.

In the study, they analyzed home sales in a variety of markets in 2016 and the first half of 2017. The data showed that:

“FSBOs tend to sell for lower prices than comparable home sales, and in many cases below the average differential represented by the prevailing commission rate.”

The results of the study showed that the differential in selling prices for FSBOs when compared to MLS sales of similar properties is about 5.5%. Sales in 2017 suggest the average price was near 6% lower for FSBO sales of similar properties.

Bottom Line

Price your house at or slightly below the current market value and hire a professional. This will guarantee that you maximize the price you get for your house.

The study also revealed that:

Roughly 63% of all homeowners have seen their equity increase since Q1 2016

The average homeowner gained about $14,000 in equity between Q1 2016 and Q1 2017

Only 1.6% of residential properties are near-negative equity

Below is a map showing the percentage of homes with a mortgage, in each state, that have positive equity. (The states in gray have insufficient data to report.)

Significant Equity Is On The Rise

Frank Martell, President & CEO of CoreLogic, believes this is great news for the “long-term health of the U.S. economy.” He went on to say:

“Homeowner equity increased by $766 billion over the last year, the largest increase since Q2 2014. The rising cushion of home equity is one of the main drivers of improved mortgage performance. Since home equity is the largest source of homeowner wealth, the increase in home equity also supports consumer balance sheets, spending and the broader economy.”

Of the 93.9% of homeowners with positive equity in the US, 78.8% have significant equity (defined as more than 20%). This means that nearly three out of four homeowners with a mortgage could use the equity in their current home to purchase a new home, now.

The map below shows the percentage of homes with a mortgage, in each state, that have significant equity. (The states in gray have insufficient data to report.)

Bottom Line

If you are one of the many homeowners who are unsure of how much equity they have in their homes and are curious about their ability to move, let’s meet up to evaluate your situation

5 Reasons Why You Should Not For Sale By Owner!

In today’s market, with home prices rising and a lack of inventory, some homeowners may consider trying to sell their homes on their own, known in the industry as a For Sale by Owner (FSBO). There are several reasons why this might not be a good idea for the vast majority of sellers. Should Not For Sale By Owner!

Here are the top five reasons:

1. Exposure to Prospective Buyers

Recent studies have shown that 94% of buyers search online for a home. That is in comparison to only 16% looking at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home. Do you?

2. Results Come from the Internet

Where did buyers find the homes they actually purchased?

51% on the internet

34% from a Real Estate Agent

8% from a yard sign

1% from newspapers

The days of selling your house by just putting up a sign and putting it in the paper are long gone. Having a strong internet strategy is crucial.

3. There Are Too Many People to Negotiate With

Here is a list of some of the people with whom you must be prepared to negotiate if you decide to For Sale by Owner:

The buyer who wants the best deal possible

The buyer’s agent who solely represents the best interest of the buyer

The buyer’s attorney (in some parts of the country)

The home inspection companies, which work for the buyer and will almost always find some problems with the house

The appraiser if there is a question of value

4. FSBOing Has Become More And More Difficult

The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years. For Sale By Owner is not easy or simple.

The 8% share represents the lowest recorded figure since NAR began collecting data in 1981.

5. You Net More Money When Using an Agent

Many homeowners believe that they will save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission.

Studies have shown that the typical house sold by the homeowner sells for $185,000, while the typical house sold by an agent sells for $245,000. This doesn’t mean that an agent can get $60,000 more for your home, as studies have shown that people are more likely to FSBO in markets with lower price points. However, it does show that selling on your own might not make sense.

Bottom Line

Before you decide to take on the challenges of selling your house on your own, let’s get together and discuss the options available in your market today.